False Insurance Claims Cost Everyone
Fraud and Employee Benefits Plan
March is Fraud Awareness Month. Now is a good time to update our article on Fraud and your Employee Benefits Plan and share a recent example to remind readers of the impact fraud has on employee benefits. As advisors, clients and employees both make us aware of the inconveniences that are experienced when claims are reviewed or their favourite practitioner is audited for her credentials. According to Benefits Canada, nearly 95% of all benefit plans have been affected by fraud. According to the Canadian Health Care Anti-Fraud Association nearly 20% of all claims are fraudulent, depending upon geographic location, meaning between $600 million and $3.4 billion is being stolen annually.
Fraudulent Activity Affects all Plans
Fraudulent activity affects all plans; it is not a victimless crime. Unless detected, fraudulent claims are paid by employers – and very few are detected. This can mean the difference between maintaining or improving a plan and having to increase rates or reduce coverage; it can compromise plan members’ personal information or result in the termination and/or criminal charges for a plan member found complicit. Fraudulent claiming abuse or misuse can take many forms. Sometimes, the fraud is committed by a practitioner or their staff, without the employee’s knowledge while other times, fraud has been committed with the plan member’s involvement.
Here are some typical examples:
- An employee reaches the maximum on a paramedical service such as chiropractic treatments and the practitioner continues billing the treatment as massage or bills it as another family member on the same plan.
- A provider who tries to use plan member information (i.e., usernames, passwords and other personal information) to charge for products and services never received.
- A spa treatment such as a facial billed to the plan as a massage
- Non-prescription sunglasses billed as prescription eyewear
- A provider offering cash or other incentives in exchange for policy and certificate numbers.
- Cosmetic treatment such a teeth whitening billed as dental procedure
- Dental procedures claimed but not performed
- Individuals not covered under the plan receiving treatment, medical products or services charged to a plan member’s plan
- Services or products claimed but not paid for;
- Providers who ask if a patient has insurance before providing any services. The employee or your plan sponsor may end up paying more than someone who does not have insurance.
A Recent Example of Fraud
In reviewing a client’s claims, recently, we noticed that their paramedical service claims had doubled over previous years. We ordered a more detailed report which revealed that one employee and his family reached the maximum claims amount in all their paramedical service. Their claims accounted for half the total paramedical claims for this 40 employee group.
We immediately contacted the plan carrier. They agreed that it was serious enough to warrant an audit. The employer, of course, wanted to know who the employee was. To protect the employee’s privacy, that information couldn’t be made available.
After a two month investigation, it was determined that the fraud was real but that the employee and his family were victims too. All claims had come from one practitioner billing the plan using stolen provider numbers and the employee’s certificate number used multiple times after a single visit. The carrier removed the claims from the client’s experience.
How Can Employees Help Identify Fraud?
Employees should be encouraged to take a proactive approach to monitoring their plans and claims. Some things they can do to help reduce fraud include:
- Ensure drug cards and certificate numbers are kept safe and private, like credit cards;
- Read the Explanation of Benefits (claims report) each month and question any claims not recognized;
- Read provider claim forms and never sign a blank form or one that includes treatment or product not yet received;
- Participate in audits when asked to do so. Sign release of information authorizations or complete questionnaires;
- Know up-front what will be charged for a product or service;
- Ensure practitioners are properly licensed or registered as required. Contacting the customer service department of the insurer in advance may confirm that a practitioner is in good standing;
- Be wary of practitioners offering incentives or asking to look at plan booklets to confirm maximum coverage.
What Are Plan Carriers Doing to Prevent Fraud?
Artificial Intelligence (AI)
As fraudsters become more sophisticated, so does the technology used to counter then. The newest weapon in the technological arsenal is Artificial Intelligence (AI). Carriers are using AI to identify patterns in massive amounts of claiming data that can completely elude human analysis, for many reasons. AI involves Machine Learning technology; the programs continually learn how to identify fraud and, as a result, can keep up with the changing strategies of fraudsters.
Insurance carriers are putting more effort into fraud prevention than in the past. Random claim audits are done more frequently now, particularly as more employees submit claims on line. Carriers also randomly audit practitioners to be sure their credentials are accurate and that they are meeting their regulatory requirements.
Carriers may ask for additional information to help them assess the veracity of a claim or practitioner. Additional information may require the employee’s signed permission to release but the information sought will only pertain to the specific claim being reviewed.
Often, a carrier may not allow a particular practitioner to be paid direct. Rather, the employee would have to pay out of pocket and submit the claim.
Increasingly, carriers are declining to pay claims that have been paid in cash. The issue is that confirmation of a traceable and identifiable source of payment isn’t always possible. This means that the carrier requires a copy of a payment transaction to confirm full payment. This could include:
- Cancelled cheque
- Debit card receipt
- Bank statement
Steps to reduce fraud can often be inconvenient for employees and practitioners both. However, fraud is a serious issue that impacts all benefit plans. Given the revelation that over $5 million in fraudulent claims were charged to the Toronto Transit Commission benefits plan a few years back, employees must be patient when carriers ask for their co-operation. A few extra steps can help protect your benefit plan in the long run. Contact ASSOCIUM Benefits or your carrier if you suspect fraud or just want more information on how to protect your plan or contact the Canadian Life and Health Insurance Association.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.